There's a simple reason why I selected the largest five-star gainers, as opposed to other big-name winners making noise on Monday, like one-star homebuilders Beazer Homes and Hovnanian Enterprises (NYSE: HOV) . Stocks go up all the time, but unless you were able to predict the pop, what does it matter?

Our community of more than 94,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proven its market-beating prowess: Over its first year, top-rated stocks returned roughly 28%.

Written in the (five) stars?For example, out of the 165 CAPS All-Stars who've rated Rowan Companies, 98% have a bullish opinion. Fueled by that strong top-notch support, the Houston-based driller has kept a four or five-star rating for over six months straight.

One year ago, CAPS All-Star RLMcCormickEqtydrilled down on Rowan's business mix: "Drilling is about two thirds of the company's revenue, and is seven times more profitable than manufacturing ... The stock price has not been keeping up with earnings growth as the PEG ratio is only .4, so the company is a value play as well as a growth and turn-around play."

Consistent with that bullish take, shares of Rowan popped yesterday after management announced plans to divest its manufacturing subsidiary, LeTourneau Technologies, in order to "crystallize" the segment's value for shareholders.

The bullish takeaway?Always get the spin on spinoffs. Though massive mergers tend to steal all the headlines, corporate spinoffs -- in which a parent sets one of its divisions free -- can be more rewarding over time. Whether it's meant to unlock a division's true market value, pass the value of an otherwise hard-to-sell business, or dispose of a segment in the most tax-efficient manner, most spinoffs aim to create genuine value for shareholders -- something we Fools always like to see.

And now for the losers ... Of course, winning isn't everything in the stock market. Here are Monday's biggest one-star decliners:

One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in highly rated Merck (NYSE: MRK) may have caught our community off-guard, one-star stocks are fully expected to fall hard. In the first year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Sad days ahead for the ethanol producers. With prices of ethanol at pathetic 2.00/gal and corn prices at all time high of 5.00/bushel things are looking ugly.... With all the ethanol plants expected to come online over the next year and yields already surpassing federal mandates in my opinion ethanol plants are doomed to fail.

In line with that gloomy outlook, ethanol stocks sank yesterday -- including one-stars US BioEnergy, Verasun, and Pacific Ethanol -- after the Department of Agriculture predicted corn supplies would be down this year, signaling higher costs for ethanol producers.

The bearish lesson?
Don't believe the hype. Alternative energy plays like ethanol fuel may sound like exciting investments, but without solid evidence of their long-term economic viability, it would be tough to classify them as prudent buys. As Charlie Munger once candidly put it, "Running cars on corn is about the stupidest thing I ever heard of. Our government is under tremendous political pressure [to support corn ethanol], even though it makes no sense."

The final Foolish moveInvestors often focus strictly on stock price movements without realizing that developing a proper stock-picking process counts most.

Over at Motley Fool CAPS, thousands of investors are Foolishly sharing insightful investment tips to help, above all else, identify tomorrow's big movers. Over time, consistently reverse-engineering winning -- and losing -- stocks will help you become a more Foolish investor.

Log in to CAPS today and start participating. It's absolutely free -- and a lot of fun!

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